Genes involved in keratinocyte differentiation commonly have AP-1 dependent regulatory sequences in promoter sites. In differentiating keratinocytes, the AP-1 DNA binding complex consists of Fra 1, Fra 2, Jun B, Jun D and c-Jun. However CREB, CREM alpha and ATF-1 are also induced in differentiating keratinocytes and bind to the AP-1 target sequence. Dominant-negative constructs for both Fos and CREB family members increased transcriptional activity of CRE and TRE reporter constructs and upregulated keratinocyte gene expression suggesting these protein families are transcriptional repressors in differentiating keratinocytes. Pou domain genes, skn 1 and tst 1, also contribute to the regulation of keratinocyte gene expression as mice null for these factors display aberrant regulation of loricrin, spr 1 and keratin 14. Protein kinase C (PKC) is required to induce both CREB and AP-1 factors in differentiating keratinocytes. PKC is also essential to the death pathway in terminally differentiated epidermal cells. An adenoviral vector was generated for PKC delta, and infected keratinocytes undergo rapid death when treated with the PKC activator 12-O- tetradecanoylphorbol-13-acetate (TPA). Cell death is blocked by PKC inhibitors but not inhibitors of several other serine kinases. Cell death from PKC delta activation is associated with rapid changes in mitochondrial function, and both normal and neoplastic keratinocytes are responsive. Cell lines have been established from mouse hair follicle buds that produce the lower hair forming portions of hair follicles when injected in vivo with dermal papilla cells. Melanoblasts from the cell line melb-a are able to incorporate into these hair follicles to form pigmented hair. These studies suggest that a pre-existing cell lineage with a strong tendency to associate with dermal papilla cells to form hair follicles subcutaneously has been selected.